Cautious border policy with other green countries will help airlines recover

After the gradual ease of lockdown and travel regulations, the airline industry in Malaysia can recapture the sales of their international flights to green countries through the Reciprocal Green Lane (RGL) scheme.

The Covid-19 pandemic has heavily affected Malaysia’s tourism industry and air travel sector.

The country welcomed 4.58 million tourists from the Asean region in the first quarter of 2019, but the numbers have dropped by 37.3% in the first quarter of 2020, according to Tourism Malaysia.

Based on Malaysia Airports Holdings Berhad’s (MAHB) data, there was a 60.6% decline in air traffic in the first half of 2020 – international and domestic sectors contracted by 63.5% and 57.8% respectively.

The AirAsia Group Bhd also reported suffering a net loss of RM992.89 million in its second quarter in 2020.

Nevertheless, the RGL travel scheme could mark the recovery for the airline sector. RGL is one of two travel schemes introduced by Malaysia and Singapore for business and official purposes between both countries starting from Aug 17. Both countries are green zones.

This scheme requires the traveller to stay in the visiting country for two weeks before they can resume travel. They also need to download and use tracking apps during their stay and test negative in the Polymerase Chain Reaction (PCR) test.

Since the RGL imposes a stay of not more than 14 days, this is good news for airlines as they can be assured that a return ticket will be booked soon.

Additionally, the RGL travel scheme’s strict regulations can preserve the status of green zone countries, that is, countries with a low spread of Covid-19 infections.

So far, six countries are considered as green zones; Singapore, Brunei, Australia, New Zealand, Japan and South Korea.

Currently, Malaysia has only carried out the RGL travel scheme with Singapore, but on a cautious basis.

Before the Covid-19 pandemic, the number of flights between the countries was 30,187 flights annually. Under the RGL travel scheme, airlines are only allowed to handle up to 400 passengers per week.

The RGL travel scheme with Singapore should be adopted as a basis for extending the scheme to other green countries.

If the experience with Singapore proves to be successful, the government should reopen the border and establish other RGL agreements with the other green countries, but again with caution.

It will give the airline industry a chance to recapture their international flights and improve their financial position.

The faster Malaysia reopens the border for green zone countries, the faster the airline industry will recover. A successful RGL scheme with other green countries will also help to revive the “Visit Malaysia 2020” campaign.

To promote this scheme, the government should ensure compliance by the other green countries with close monitoring in terms of their handling and management of the pandemic before any RGL agreement is struck.

Should the Covid-19 situation in any of the countries deteriorate, after the agreement is made, then the scheme must be suspended.

Airlines should also take advantage of the pause in operations by preparing for a future post Covid-19 environment and going digital.

One good example is the partnership between AirAsia and Agoda – an online travel booking platform – where the aim is to capture a bigger market in Southeast Asia. Through this kind of partnership, both companies can benefit from their partner’s customers and therefore boost their recovery.

Although experts say the pandemic could last for months, which means that Malaysia’s tourism industry may be in the doldrums until June 2021, we don’t have to wait until then to come out with schemes such as the RGL to help the airline industry. However, it must be done in a cautious manner.

 

Jamari Mohtar and Muhammad Rasyid Abdurrahman are part of a research team at EMIR Research.

The views expressed are those of the authors and do not necessarily reflect those of FMT.

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